Goldman Sachs anticipates that Kamala Harris’ economic policies will remain largely unchanged if she secures the Democratic presidential nomination. This assessment follows President Biden’s announcement that he is withdrawing from the race amid mounting pressure after a lackluster debate against Republican Donald Trump.
Shortly after his statement, Biden endorsed Vice President Harris, who expressed her intention to continue her campaign. She has already gained endorsements from several prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, Goldman analysts predict limited shifts in policy regardless of this leadership change.
In a note released over the weekend, Goldman Sachs, led by chief economist Jan Hatzius, stated that they do not foresee significant changes in the fiscal and trade policy agenda for the Democrats if Harris becomes the nominee. While the chance of Democrats maintaining the White House has slightly increased, it remains just below 40%.
Goldman Sachs has pointed out that with the expiration of key provisions of the Tax Cut and Jobs Act approaching in 2025, tax policy will be a crucial focus for the next presidential administration. The incoming president will have to navigate decisions regarding the extension of tax cuts and potential new taxes.
For fiscal policy under a potential Biden win, Goldman Sachs forecasts include a proposed tax hike for individuals earning $400,000 or more, raising the rate to 39.6% from the current 35%/37%. Additionally, Biden’s suggested corporate tax rate would increase to 28%, although the firm expresses skepticism about Congressional approval, suggesting a more likely rate closer to 25%. Furthermore, Biden proposes increasing the Social Security and Medicare tax rate on high incomes to 5% from the current 3.8%.
In the event that Harris becomes the nominee, speculation arises that the top candidates for the vice presidential spot could include Pennsylvania’s Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.